Your Questions About Money Making Stocks

Nancy asks…

how am i ever going to make money with stocks?

I purchased stocks in 2009. In 2010 my portfolio was over 10%. Now in 2011, my portfolio is only at about 2%. How do I get to a constant rate of return? I feel like my money never really gets any where.

John answers:

Stocks do not provide a constant rate of return. They provide an erratic rate of return. As a crude rule of thumb, you can estimate you will lose money one out of three years. Over the next 50 years you can crudely estimate you will average maybe 10% a year, but it will be a wild ride with many crashes. Be prepared for a roller coaster, or get off the ride.

Charles asks…

how do you make money with stocks?

im 18 so i really dont know how this works. But how do you make money buying stocks. i herd if you buy a stock for 300 dollars if the stock goes up a point now you have 600 dollars. just wondering how it works thanks.

John answers:

To make $300 profit from a $1 rise in stock price you’d have to risk a lot of money first. By a lot i’m talking about $5,000+

3 days ago i bought a stock for $8,850 for $88.50, i bought 100 shares of the stock. That day at the end of that day the stock went up to about $99.37 that’s $9,937 and i sold it. My profit for that 1 stock for that day, 3 days ago was $1087. However, in one day making a profit like this is RARE. I’ve NEVER made a profit that great before in 1 day. However, this stock was Netflix, NFLX as you can see i made a great decision to sell that day because today this stock is trading at $92. My point is you have to RISK a LOT first. It’s not easy to make money.

Joseph asks…

Explain the basics of Stock Market money making?

So you buy for low and sell for higher. Can i get an example of a stock that you have personally sold and made money on the stock market?

John answers:

Bank of America in March 2009
Bought it at 3 and sold it at 16
Made serious money

Bank of America this year
Bouth it at 12 and it’s now at 6
Lost half my money

Ruth asks…

making money with buying stocks?

How exactly do you earn money through this? How do they pay you, and how much?

John answers:

You decide on a stock and to what level you wish to purchase and to make it really simple I will use the High St Bank example.

1. Decide on what; suggest say British Airways; currently 1.59.3 per share
2. Say you have £5,000 to invest. This gets you around 3,140 shares depending on buy/sell differential.
3. Pay fee for purchase, around say £15.00
4. Watch market and wait for increase
5. After say 3 months they are trading at 2.29 per share
6. You decide to sell all your holding against part sale on a rising market; this permits further speculation for a second or third hit.
7. See what figure for selling is offered by the bank (less fee, possibly £30-45.
8. Calculation shows your stock investment worth £7,190 (less fees, suggest £40; nett value = £7,150
9. Enjoy CG allowance and pocket just over £2,000 plus original investment.
10. Money usually deposited in your account with x days, price selected for sale is fixed even in a falling market.

This is the real basics.


Sandra asks…

How do you make money with stocks, mutual funds?

how do you go about that
i want to start
whats etrade, charles schwab , sharebuileder, vanguard , fidelity?
which ones are they and with low risk?
why not ?
you see so many investment commercials?
alot of people are doing it

John answers:

The general approach is to accumulate positions in good solid companies during your working career and then plan a disbursement for your retirement. The money invested should compound based upon the quality and efforts of the companies with respect to their business model with taxes on capital gains deferred till you sell (dividends are taxed in the year they are distributed). If you attempt to go for fast money by active trading, you are encountering more frictional costs in terms of commissions and taxes as well as more risk. Don’t focus so much on how high the dividend is, focus more on the viability of the business model, the competition in the field and the quality of the management team. Strictly speaking, the higher the yield (dividends in your case) the higher the risk.

You should probably start by reading more.

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